EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES - NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-V1V dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) AUDITED FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 NINE THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH TI-JUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) CONTENTS Page PART I: FINANCIAL STATEMENTS Statement of the Board of Directors 2 -3 Independent Auditor's Report on Financial Statements for the fiscal year ended 31 December 2020 4-5 Statement of capital and expenditures for the fiscal year ended 31 December 2020 6 Statement of capital balance as of 31 December 2020 7 Statement of balance and fluctuation of the designated account for the fiscal year ended 31 December 2020 8 Statement of withdrawals for the fiscal year ended 31 December 2020 9 Notes to the Financial Statements for the fiscal year ended 31 December 2020 10- 17 PART H: INDEPENDENT AND REASONABLE ASSURANCE REPORT ON COMPLIANCE 18- 19 PART INDEPENDENT AND REASONABLE ASSURANCE REPORT ON THE INTERNAL CONTROL 20 - 21 APPENDIX: MANAGEMENT LETTER 22 - 27 1 NINE THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-fr7V dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) STATEMENT OF THE BOARD OF DIRECTORS 2.0647 The Board of Directors of Ninh Thuan Agriculture and Rural Development Project Authority (hereinafter 40- referred to as "the Project Authority") presents this statement together with the Financial Statements for CoNG ' ay TRACK NHI4114 the fiscal year ended 31 December 2020. TOAN yA e CONG NGEIc TH. Business highlights DAI Ninh Thuan Agriculture and Rural Development Project Authority is a public non-business entity -v4, • Fp He established by the People's Committee of Ninh Thuan Province according to the Decision No. 23/QD- UBND dated 06 February 2017 of Chairman of the People's Committee of Ninh Thuan Province. Head office Address : No. 36, 16 thang 4 Street, Phan Rang — Thap Cham City, Ninh Thuan Province, Vietnam Tel. : +84 (0259) 383 3254 The functions, duties of the Project Authority are: To exercise functions, duties and rights of the investor and directly manage the implementation of assigned construction projects; To responsible for their activities under the Laws and the investor. To provide management consultancy for other projects in relation to agricultural and rural development works if they meet all conditions on qualification under the Laws, on the basis of the completion of assigned duties. Board of Directors The Board of Directors of the Project Authority during the year and as of the date of this statement includes: Full name Position Appointing/resigning date Director Appointed on 18 March 2020 ,7;;;449t Mr. Nguyen Vinh Quang Resigned on 01 April 2021 CONG Mr. Nguyen Ngoc Thinh Deputy Director Appointed on 02 May 2019 I? 'MACH NHISM a *klM 'MAN V) Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan A& Province Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan Province 40 • T.P (hereinafter referred to as "the Project") has been approved under: the Decision No. 346/QD-TTg dated 20 March 2017 of Prime Minister on approving the scheme for the 4 sub-investment projects in Binh Dinh, Quang Ngai, Phu Yen and Ninh Thuan Province under the "Emergency Natural Disaster Reconstruction Project in some Central Provinces" with the capital borrowed from the World Bank. the Decision No. 564/QD-UBND dated 31 March 2017 of Chairman of the People's Committee of Ninh Thuan Province on approving Feasibility Statement (FS) of Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan Province. The project is funded by the World Bank through the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) (hereinafter referred to as "Financing Agreement"). Auditors A8cC Auditing and Consulting Co., Ltd. and Great South Auditing and Information Technology Solution Co., Ltd. (GS-Audit) have conducted the audit on the Financial Statements of the Project for the fiscal year ended 31 December 2020. NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINE THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-IN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) STATEMENT OF THE BOARD OF DIRECTORS (cont.) Responsibilities of the Board of Directors The Board of Directors of the Project Authority is responsible for the preparation of the Financial Statements to give a true and fair view of the financial position of Project. In order to prepare these Financial Statements, the Board of Directors must: select appropriate accounting policies and apply them consistently; /U HA *% Al PHAP make judgments and estimates prudently; TIN * state clearly whether the accounting standards applied to the Project are followed or not, and all the )tio ‘LM material differences from these standards are disclosed and explained in the Financial Statements; prepare the Financial Statements on the going-concern basis, except for the cases that the going- co concern assumption is considered inappropriate; design and implement effectively the internal control system to ensure the compliance with regulations that might have a direct and material effects to the Financial Statements, as well as the preparation and presentation of the Financial Statements free from material misstatements due to frauds or errors; and responsible for the confirmation of the effectiveness of this internal control system. The Board of Directors hereby ensures that the Project Authority has complied with the aforementioned requirements in preparation of the Financial Statements; the accounting books have been fully recorded and can fairly reflect the financial position of the Project at any time and the Financial Statements have been prepared in compliance with the accounting policies presented in the Notes to the Financial Statements as well as the provisions of the Financing Agreement. The Board of Directors is also responsible for managing the Project's assets and consequently has taken appropriate measures to prevent and detect frauds and other irregularities. The Board of Directors hereby commits to the compliance with the aforementioned requirements in preparation of the Financial Statements and Report on Compliance. The Board of Directors, on the date of this statement, has authorized the release of the Financial Statements and the Report on Compliance. 4-F1N I f the Board of Directors, k BAN QU;Sli pU DMYTUP GAG CO IN! 140 . . 61}1011 ' PHA 1111iti 161111 0W . "‘-ASTatlitgoc Thinh Deputy Director Ninh Thuan, 14 July 2021 3 A&C AUDITING AND CONSULTING CO., LTD. bakertilly cav3 iv viAi man vA Si 1 ,14P cam ref law eAl NAM . CaosiceSt.rneet aro°, I&tC*M 1flE472V1 div§a.c.oam.un Sod 0 Bwici,a Xi Nu JO 4ipreW51. DuitlaN Ter -sta me ?en kIttleaccan... A&C GREAT G0uTHAuo 11m3 AND I .T. SOLUTION CO., LTD. °ironwe Nig itSri 1.0 2 1111 to 624 Ptqii.lenka 1011/17 'Mir 4640551‘4515t 1ra- H alponn 282 NaAim Irmq 114/3n St The Ala No 6 Wart 10 Flu Naar Oistnn t6 31 r.An 31 8WinCo1u 9.11721444.r 6.9 .bIlwast.ta)“ Mar 14 1410A213780i8 nnwita-t Com.m BIM IOURI Tr! 164 6138 476 790 fa. 1134 8! al 476 149 Ernwl 1100411).1.11t No. 03KT-1/21/TC-AC-GS INDEPENDENT AUDITOR'S REPORT To: The Board of Directors Ninh Thuan Agriculture and Rural Development Project Authority Opinion of Auditors We (A&C Auditing and Consulting Co., Ltd. and Great South Auditing and Information Technology Solution Co., Ltd.) have audited the accompanying Financial Statements of Emergency Natural Disaster Reconstruction Project in some Central Provinces —Ninh Thuan Province (hereinafter referred to as "the Project"), including statement of capital and expenditures, statement of capital balance, statement of balance and fluctuation of the designated account, Statement of withdrawals for the fiscal year ended 31 December 2020 and the Notes to the Financial Statements presenting a summary of important accounting policies and other explanatory information (hereinafter referred to as "Financial Statements") which were prepared from page 06 to page 17. In our opinion: The accompanying Financial Statements give a true and fair view of the financial position of the Project as of 31 December 2020, the capital received and the expenditures for the fiscal year ended 31 December 2020, in conformity with the accounting basis and accounting policies presented in Notes No. 2 and 3 in the Notes to the Financial Statements. Statement of balance and fluctuation of the designated account gives a true and fair view of the balance of the designated account as at 31 December 2020, the capital received and the payment made through the designated account for the fiscal year ended 31 December 2020 in accordance with the provisions of the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA). Withdrawal applications were compared with the Statement of expenditures for the fiscal year ended 31 December 2020, and these statements are fully supported by valid documents. Basis for audit opinion We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Responsibility of Auditors for the audit of the Financial Statements. We are independent with the Project as the ethical requirements related to the audit of the Financial Statements in Vietnam, and we have complied with other ethical responsibilities under these standards. We believe that the audit evidences we have obtained are sufficient and appropriate to provide a basis for our audit opinion. Accounting basis We would like to draw the attention of the readers to Notes No. 2 and No. 3 in the Notes to the Financial Statements on the applicable accounting basis and accounting policies. The Financial Statements are prepared in accordance with the accounting basis and accounting policies described in Notes No. 2 and No. 3 and the requirements of the World Bank. Responsibility of the Board of Directors The Board of Directors of the Project Authority is responsible for the preparation of the Financial Statements in accordance with the accounting basis and accounting policies described in Notes No. 2 and No. 3 in the Notes to the Financial Statements; and for such internal control as the Board of Directors determines necessary to enable the preparation of the Financial Statements to be free from material misstatement due to fraud or error. 4 In preparing the Financial Statements, the Board of Directors is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Board of Directors either intends to cease operations, or has no realistic alternative but to do so. Those who are in charge of governance must supervise the preparation process of the Project's Financial Statements. Responsibility of Auditors for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statement as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report to )20647, express our opinion. Reasonable assurance is a high level of assurance, but is not guarantee that an audit conducted in accordance with International Standards on Auditing will always detect any material :oNG T misstatement. The misstatements can arise due to fraud or error and are considered material if, I NHIEM HI individually or in the aggregate, they could reasonably be expected to influence the economic decisions OAR pi a NGHE The of users taken on the basis of these Financial Statements. NA As part of an audit in accordance with International Standards on Auditing, we exercise professional .- --„- HO ' TP judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor's Report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidences obtained up to the date of our Auditor's Report. However, future events or conditions may cause the Project to cease to continue as a going concern. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Auditing and Consulting Co., Ltd. South Auditing and Information nology Solution Co., Ltd. 01-r : hi Dung eputy General Do Thi Mai Loan Nguyen Quang Toan N uyen Ha Nghia Director Auditor General Director Auditor Audit Practice Registration Audit Practice Registration Audit Practice Registration Audit Practice Registration Certificate No. 0100-2018- Certificate No. 0090-2018- Certificate Na. 1057-2018- Certificate No. 2645-2018- 008-1 008-1 169-1 169-1 Ho Chi Minh City, 14 July 2021 5 NINE THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 STATEMENT OF CAPITAL AND EXPENDITURES For the fiscal year ended 31 December 2020 From 01 Accumulated Accumulated January 2020 as of 31 as of 31 to 31 December 2020 December December 2019 Note 2020 VND VND I. CAPITAL RECEIVED 1. Capital from IDA 5 46.100.000.000 97.537.072.516 51.437.072.516 2. Counterpart fund 6 9.849.508.369 30.927.601.057 21.078.092.688 55.949.508.369 128.464.673.573 72.515.165.204 IL EXPENDITURES I. Expenditures from IDA capital 7a 53.542.235.179 53 542 235 179 1.1 Construction expenses 52.861.504.629 52.861.504.629 1.2 Expenses for construction consultcmcy and supervision 1.3 Other expenses 680.730.550 680.730.550 2. Expenditures from counterpart fund 7b 5.142.108.432 27.429.641.893 22.287.533.461 SO 2.1 Expenses for compensation, 1.267.391.363 1.267.391.363 I( support and resettlement 2.2 Construction expenses 2.3 Consultancy expenses 1.874.717.069 18.573.860. 128 16.699. 143.059 2.4 Project management expenses 2.000.000.000 4.339.328.946 2.339.328.946 2.5 Other expenses 3.249.061.456 3.249.061.456 58.684.343.611 80.971.877.072 22.287.533.461 Exchange differences (124.366.333) (130.261.368) (5.895.035) Receipt/payment difference (2.859.201.575) 50.221.736.708 BAN QUANLY ' DI.T AN EAU nip CAC CO RINH . crt ‘fil ibao GTH Ha Thuc Huy Nguyen Thi Huyen Trang n Ngoc Thinh Preparer Accountant-in-charge Deputy Director Ninh Thuan, 14 July 2021 This statement must be read in conjunction with the Notes to the Financial Statements 6 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 STATEMENT OF CAPITAL BALANCE As of 31 December 2020 31 December 31 December Note 2020 2019 VND Capital balance ; TIN tt Beginning capital balance 50.221.736.708 Receipt/payment difference during the year (2.859.201.575) 50.221.736.708 Ending capital balance 47.362.535.133 50.221.736.708 Reflected by: Current assets Cash on hand 393.661 Deposits at treasury 78.000.000 Deposits in banks 5.976.957.240 49.162.090.524 Advances to contractors/suppliers 8 46.594.794.595 2.269.086.957 52.572.145.496 51.509.177.481 Current liabilities Payables to contractors/suppliers 9 5.114.506.985 1.209.440.773 Other payables 10 95.103.378 78.000.000 5.209.610.363 1.287.440.773 TY HEN ki iTIN Net assets 47.362.535.133 50.221.736.708 D N 71' tij \-• Imp C VAN LI cat,AN (2AUTIRD CAC GONG T b411 NAG N VA NA: mos Moti Ha Thuc Huy Nguyen Thi Huyen Trang Nguyen Ngoc Thinh Preparer Accountant-in-charge Deputy Director Ninh Thuan, 14 July 2021 This statement must be read in conjunction with the Notes to the Financial Statements 7 NINFI THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 STATEMENT OF BALANCE AND FLUCTUATION OF THE DESIGNATED ACCOUNT Period : From 01 January 2020 to 31 December 2020 Account No. : 0811370051090 Currency : USD Bank : Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombcmk) — Ninh Thuan Branch Address : No. 47, 16 thang 4 Street, Phan Rang — Thap Cham City, Ninh Thuan Financing Agreement : 6074-VN Note USD FLUCTUATION OF ACCOUNT Balance as of 01 January 2020 2.123.173,86 Add: Amount received from IDA 2.000.000,00 Minus: Amount withdrawn (3.863.761,80) Balance as of 31 December 2020 259.412,06 RECONCILIATION Amount advanced from IDA 4.221.424,00 Minus: Amounts claimed for clearance and then accepted (2.721.389,69) Advance balance from IDA of the designated account as of 31 December 2020 1.500.034,31 :• .N * Balance of designated account as of 31 December 2020 259.412,06 Add: Amounts withdrawn and not yet claimed 1.240.622,25 Advance balance of the designated account as of 31 December 2020 1.500.034,31 BANQUANLY Dyfiti DAUTU,XD CAC GCMG I IN HONG I VA PHA" 'ESN . ON cs• NIHHIHU4N 44 _-•11 , Ha Thuc Huy Nguyen Thi Huyen Trang Ngoc Thinh 01 Preparer Accountant-in-charge Deputy Director Ninh Thuan, 14 July 2021 This statement must be read in conjunction with the Notes to the Financial Statements 8 NINE THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 STATEMENT OF WITHDRAWALS For the period from 01 January 2020 to 31 December 2020 Amounts claimed for advance/clearance Amounts disbursed/accepted for advance clearance Amounts accepted Application Documented Amounts for advance Withdrawal application Date amount amount Date disbursed clearance Difference USD USD USD USD USD Accumulated as at 31 December 2019 2.221.424,00 2.221.424,00 Increase during the year: NTO I -KP 20/9/2020 - 261.908,38 20/9/2020 261.908,38 NT02-KP 15/9/2020 1.838.252,00 01/10/2020 1.838.252,00 NT03-KP 12/10/2020 119.897,34 29/10/2020 119.897,34 NT02-KPKC 01/11/2020 500.000,00 1.341,99 17/11/2020 500.000,00 1.341,99 Ninh Thuan 04 23/11/2020 420.829,06 08/12/2020 - 420.829,06 Ninh Thuan 05 30/11/2020 79.160,92 13/12/2020 - 79.160,92 Ninh Thuan 08 09/12/2020 1.500.000,00 21/12/2020 1.500.000,00 - Total increase for the fiscal year ended 31 December 2020 2.000.000,00 2.721.389,69 2.000.000,00 2.721.389,69 Accumulated as at 31 December 2020 4.221.424,00 2.721389,69 424,00 2.721.389,69 01\ &At4QUAHLY At D11APthAUTUX' z CIO COMO 121 I Ha Thuc Huy Nguyen Thi Huyen Trang A- 011h riti. 4NONgni -It, o Ngoc Thinh Preparer Accountant-in-charge uty Director Ninh Thuan, 14 July 2021 This statement must be read in conjunction with the Notes to the Financial Statements S.IM 7,----- t* M i r NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES —NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 19 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements NOTES TO THE FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 1. General information Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan Province (hereinafter referred to as "the Project") has been approved under: the Decision No. 346/QD-TTg dated 20 March 2017 of Prime Minister on approving the scheme for the 4 sub-investment projects in Binh Dinh, Quang Ngai, Phu Yen and Ninh Thuan Province under the "Emergency Natural Disaster Reconstruction Project in some Central Provinces" with the capital borrowed from the World Bank. the Decision No. 564/QD-UBND dated 31 March 2017 of Chairman of the People's Committee of Ninh Thuan Province on approving Feasibility Statement (FS) of the Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan Province. The project is funded by the World Bank through the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) (hereinafter referred to as "Financing Agreement"). The overall objectives of the project are to overcome the damages of natural disasters, restore production, ensure safety and stabilize people's lives damaged by natural disasters, floods, droughts; enhance storm and flood resistance for vulnerable areas in the future. These objectives will be achieved through: (i) restoring production, stabilizing people's lives through the restoration, renovation and upgrading of essential infrastructure works for production, (ii) ensuring social security, environmental protection, and (iii) providing necessary technical assistance, project management to effectively operate component projects. Specific objectives of the Project: Repairing, surmounting and upgrading infrastructure works for production (irrigation works, dykes, river embankments, sea embankments, irrigation canals, water reservoirs, etc.) in order to restore production, protect people's lives and properties, and reduce risks caused by natural disasters. Repairing damages to traffic infrastructure to serve the people's traveling, trading, production development, and facilitate rescue routes, transport of supplies and equipment to serve the emergency rescue for local people in flooded, drought areas when natural disasters or storms occur in the areas. Supporting to enhance the Investor's capacity for project implementation. The Project includes components as follows: Component I: Constructing and reconstructing damaged works and preventing natural disaster in the future. Component 2: Strengthening reconstruction capacity. Component 3: Project management. Component 4: Emergency rescue. The Project is divided into 09 component projects as follows: Agriculture and rural development: - Building embankment to protect Dinh riverbank in Phuoc Son Commune, Ninh Phuoc District. - Building anti-landslide embankment in Ba Rau Residential Area, Thuan Bac District. These notes form an integral part of and should be read in conjunction with the Financial Statements 10 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH TI-JUAN PROVINCE Pursuant to the Financing Agreement No. 6074-V7V dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) Building embankments to protect residential areas on both sides of Lu River, Ninh Phuoc District. Building anti-landslide embankment of Ong River in Tan Son Town, Ninh Son District. - Solidifying grades 2 and 3 canal system in Ta Ranh Reservoir, Ninh Phuoc District. - Solidifying grades 2 and 3 canal system in Tan Giang Reservoir, Ninh Phuoc District. Technical infrastructure: - Repairing and expanding the rural domestic water supply system. .0 Traffic infrastructure: :M Repairing, upgrading Ta Noi - Ma Noi Street, Ninh Son District. !IA : Repairing, upgrading Highway IA to Phuoc Ha and Tu Thien - Vinh Truong Street. Investor: Ninh Thuan Agriculture and Rural Development Project Authority. e Location of project implementation: Ninh Thuan Province. Total investment of the Project: VND 412.635.000.000. Investment capital includes: Loans from the World Bank of IDA capital is USD 16,00 million (equivalent to VND 361.600.000.000) and counterpart fund (local budget) is USD 2,258 million (equivalent to VND 51.035.000.000). Duration: 5 years (2017— 2021). Accounting basis Except for the statement of balance and fluctuation of the designated account and the Statement of withdrawals presented in US Dollar (USD), other statements are presented in VND. These Financial Statements are prepared in accordance with the accounting policies presented in Note 3449. No. 3 in the Notes to the Financial Statements. iNG The first accounting period of the Project is from 31 March 2017 to 31 December 2019. The iN subsequent accounting periods are from 01 January to 31 December annually. Accounting policies T.PW The Project Authority has applied the following accounting policies in the preparation of the Financial Statements: Foreign currency transactions Transactions in foreign currencies are converted into VND at the exchange rates ruling as at the date of transaction as announced by the commercial bank where the designated account is opened. Foreign exchange differences are recorded in "Foreign exchange differences" and are presented separately in the Statement of capital and expenditures. Recognition of the Project's capital source Capital received from the International Development Association (IDA) is recognized when remittance made into Designated Account or payments are made directly to the contractors/suppliers. These notes form an integral part of and should be read in conjunction with the Financial Statements 11 MINH TIRUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 60744PN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) Counterpart fund of the State Budget is recognized when payments are made directly to contractors/suppliers or funds are remitted to the Project Authority for settlement of Project's expenses. Other capital includes deposits interest of designated accounts (after deducting bank charges, if any). Other capital is recognized when the money is actually collected. Recognition of Project's expenses Project implementation expenses are recognized upon incurrence and availability of all valid Nu Heft supporting documents approved by the Board of Directors. PHAP ONG TIN il‘14 Payables Payables are recorded for the amounts payable in the future associated with the goods and services received. Designated accounts Designated Account is the deposit accounts in USD opened at Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)—Ninh Thuan Branch to make payments for the Project's activities. Payments are made via the Designated Account for eligible expenditures of the Project in accordance with the provisions of the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) and related regulations of the World Bank. Capital from IDA From 01 January 2020 to 31 Accumulated as of 31 December December 2020 2020 Withdrawal VND VND application USD USD 01-Ninh Thuan 2.221.424,00 51.437.072.516 NT02-KPKC 500.000,00 11.540.000.000 500.000,00 11.540.000.000 Ninh Thuan 08 1.500.000,00 34.560.000.000 1.500.000,00 34.560.000.000 Total 2.000.000,00 46.100.000.000 4.221.424,00 97.537.072.516 6. Counterpart fund From 01 January 2020 to 31 Accumulated as of December 2020 31 December 2020 VND VND Capital received from the State Budget 9.849.508.369 30.927.601.057 Total 9.849.508.369 30.927.601.057 These notes form an integral part of and should be read in conjunction with the Financial Statements 12 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES —NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) 7. Expenses for the Project 7a. Expenses for project by item from IDA capital Expenses for construction Construction consultancy and expenses supervision Other expenses Total VND VND VND VND Component project of building embankment to protect Dinh riverbank in Phuoc Son Commune, Ninh Phuoc District 13.454.368.407 13.454.368.407 Component project of building anti-landslide embankment in Ba Rau residential area, Thuan Sac District Component project of building embankments to protect residential areas on both sides of Lu River, Ninh Phuoc District Component project of building anti-landslide embankment of Ong River in Tan Son Town, Ninh Son District 11.361.224.882 11.361224.882 Component project of solidifying grades 2 and 3 canal system in Ta Ranh Reservoir, Ninh Phuoc District 363.939.731 363.939.731 Component project of solidifying grades 2 and 3 canal system in Tan Giang Reservoir, Ninh Phuoc District 16.620.192.146 16.620.192.146 Component project of repairing and expanding the rural domestic water supply system Component project of repairing, upgrading Ta Noi - Ma Noi Street, Ninh Son District 4.566.852.113 4.566.852.113 Component project of repairing, upgrading Highway IA to Phuoc Ha and Tu Thien - Vinh Truong Street 6.494.927.350 6.494.927.350 General expenses for component projects 680.730.550 680.730.550 Expenses incurred in 2020 52.861.504.629 680.730.550 53.542.235.179 Accumulated expenses as of 31 December 2020 52.861.504.629 680.730.550 53.542.235.179 Accumulated expenses as o131 December 2019 These notes form an integral part of and should be read in )resenuiliti46 WW1 ' inancial Statements 1416' 13 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES —NINH TI-JUAN PROVINCE Pursuant to the Financing Agreement No. 6071-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS • For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) - Its 7b. Expenses for project by item from Counterpart fund Expenses for compensation, Project support and Construction Consultancy management resettlement expenses expenses expenses Other expenses Total VND VND VND VND VND VND Component project of building embankment to protect Dinh riverbank in Phuoc Son Commune, Ninh Phuoc District 1.267.391.363 60.964.425 1.328.355.788 Component project of building anti-landslide embankment in Ba Rau residential area, Thuan Bac District 48.610.896 40.728.394 89.339.290 Component project of building embankments to protect residential areas on both sides of Lu River, Ninh Phuoc District 70.427.353 70.427.353 Component project of building anti-landslide embankment of Ong River in Tan Son Town, Ninh Son District 93.647.222 93.647.222 Component project of solidifying grades 2 and 3 canal system in Ta Ranh Reservoir, Ninh Phuoc District 204.633.458 204.633.458 Component project of solidifying grades 2 and 3 canal system in Tan Giang Reservoir, Ninh Phuoc District 331.445.586 913.032.111 1.244.477.697 Component project of repairing and expanding the rural domestic water supply system 691.694.803 691.694.803 Component project of repairing, upgrading Ta Noi - Ma Noi Street, Ninh Son District 211.288.089 211.288.089 Component project of repairing, upgrading Highway 1A to Phuoc Ha and Tu Thien - Vinh Truong Street 162.005.237 1.046.239.495 - 1.208.244.732 General expenses for component projects Expenses incurred in 2020 1.267.391.363 1.874.717.069 2.000.000.000 5.142.108.432 Accumulated expenses as of)! December 2020 1.267.391.363 - 18 573 860.128 4.339.328.946 3.249.061.456 27.429.641.893 Accumulated expenses as of 31 December 2019 - 16.699.143.059 2.339.328.946 3.249.061.456 22.287.533.461 These notes form an integral part of and should be read in conjuncti ' financial Statements 0* 14 * ./r - ..PEC O- 0.1C1.1i NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH TI-JUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) 7c. Expenses for each project by capital source From 01 January 2020 to 31 December 2020 Accumulated as of 31 December 2020 Accumulated as of 31 December 2019 Counterpart Counterpart Loan from Counterpart Loan from IDA fund Total Loan from IDA fund Total IDA fund Total VND VND VND VND VND VND VND VND VND Component project of building embankment to protect Dinh riverbank in Phuoc Son Commune, Ninh Phuoc District 13.454.368.407 1.328.355.788 14782.724.195 13.454.368.407 4.311.168.118 17.765.536.525 - 2.982.812.330 2.982.812.330 Component project of building anti- landslide embankment in Ba Rau residential area, Thuan Bat District - 89.339.290 89.339.290 - 1.840.764.527 1.840.764.527 - 1.751.425.237 1.751.425.237 Component project of building embankments to protect residential areas on both sides of Lu River, Ninh Phuoc District 70.427.353 70.427.353 - 2.313.580.978 2.313.580.978 - 2.243.153.625 2.243.153.625 Component project of building anti- landslide embankment of Ong River in Tan Son Town, Ninh Son District 11.361.224.882 93.647222 11.454.872.104 11.361.224.882 4.452.361.220 15.813.586.102 - 4.358.713.998 4.358.713.998 Component project of solidifying grades 2 and 3 canal system in Ta Ranh Reservoir, Ninh Phuoc District 363.939.731 204.633.458 568.573.189 363.939.731 381.857.715 745.797.446 177.224.257 177.224.257 Component project of solidifying grades 2 and 3 canal system in Tan Giang Reservoir, Ninh Phuoc District 16.620.192.146 1.244.477.697 17.864.669.843 16.620.192.146 4.076.263.799 20.696.455.945 - 2.831.786.102 2.831.786.102 Component project of repairing and expanding the rural domestic water supply system - 691.694.803 691.694.803 - 2.519.862.223 2.519.862.223 - 1.828.167.420 1.828.167.420 Component project of repairing, upgrading Ta Noi - Ma Noi Street, Ninh Son District 4.566.852.113 211.288.089 4.778.140.202 4.566.852.113 3.440.265.768 8.007.117.881 - 3.228.977.679 3.228.977.679 Component project of repairing, upgrading Highway IA to Phuoc Ha and Tu Thien - Vinh Truong Street 6.494.927.350 1.208.244.732 7.703.172.082 6.494.927.350 2.914.997.545 9.409.924.895 - 1.706.752.813 1.706.752.813 General expenses for component projects 680.730.550 680.730.550 680.730.550 1.178.520.000 1.859.250.550 - 1.178.520.000 1.178.520.000 Total 53.542.235.179 5.142.108.432 58.684.343.611 53342.235.179 27429.641.893 80.971.877.072 - 22.287333.461 22.287.533.461 These notes form an integral part of and should be read in conjunction with the Financial Statements 15 ej e (C NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074- VP! dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) Advances to contractors/suppliers 31 December 2020 31 December 2019 VND VND An Thuan Construction and Investment Joint 771,' Stock Company 2.269.086.957 Sao Do Construction and Trading Joint Stock 11110 Company 7.024.028.733 Al Pl.b Gia Viet Joint Stock Company 6.759.986.747 iNGT Construction & Rural Development Joint Stock Company 4.122.871.100 Song Han Investment Construction Corporation 3.976.334.284 Vietnam Construction Joint Stock Company No. 12 3.779.421.457 Waseen Construction Investment Water Supply Sewerage and Environment Company Limited 3.191.759.740 Ninh Thuan Province Land Fund Development Agency 2.176.365.691 315 Group Joint Stock Company 2.914.011.557 An Nguyen Construction Company Limited 1.721.903.526 Other suppliers 10.928.111.760 Total 46.594.794.595 2.269.086.957 Payables to contractors/suppliers 31 December 2020 31 December 2019 498/s VND VND Construction Investment Joint Stock Company 2.258.811.555 An Thuan Construction and Investment Joint Thl '] Stock Company 404.796.000 I VA TI.0 Thuy Loi University Consultant Company &C Limited - Central Branch 212.065.000 212.065.000 e Th d Chung Thien My Consultant Construction and Trade Company Limited 247.712.674 211.664.674 Hung Thinh Construction Consultancy Company Limited 49.800.900 414.685.437 319 Born, Mins, Uxo One Member Company Limited 228.060.393 228.060.393 Institute of Training and Science Application 142.964.827 142.964.827 Other suppliers 1.570.295.636 442 Total 5.114.506.985 1.209.440.773 Other payables 31 December 2020 31 December 2019 VND VND Amount for selling bidding documents 78.000.000 Other payables 95.103.378 Total 95.103.378 78.000.000 These notes form an integral part of and should be read in conjunction with the Financial Statements 16 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074- VI'.' dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) FINANCIAL STATEMENTS For the fiscal year ended 31 December 2020 Notes to the Financial Statements (cont.) Subsequent events There is no material subsequent event which is required adjustments or disclosures in the Financial Statements. Approval of the Financial Statements The Board of Directors of the Project Authority has approved these Financial Statements on 14 July 2021. Ha Thuc Huy Nguyen Thi Huyen Trang guyen Ngoc Thinh Preparer Accountant-in-charge Deputy Director Ninh Thuan, 14 July 2021 These notes form an integral part of and should be read in conjunction with the Financial Statements 17 AUDITING AND CONSULTING CO., LTD. 6 bakertilly car Ty misiu vA obi PRAP CONS net meta m WAI NAM 6lwyStr5LralbOst.140WrICtOirxi 11E14 Watia;172 61144a, corn P.04011. BronavriNOla traiNotSt DerpAie 1014.01, Vruin, M-61024,1367170 A&C GREAT RGLJTHAuomNo AND LT. SOLUTON CO.. LTD. Peva 1011.1w., 43911 SAW 9 kr 1.1 tvia9Pt, aorst No lin n, WPgrr I 4t434S1I1I !Olympia.< cow hSWirter'S 263 Nigmn trong Imo St 014 611803 Want 10 RII Nur Dotnct 8'O, Mnr. ay P Pordi len•9.11449•1014 tde.gio War 61.-N i3t21376*36 gn EINAT MUTH I'm 164 61 38 476 798 tuc (44 81 36 976 146 EM011 mlaps wait Dam No. 03KT-2/21TC-AC-GS INDEPENDENT AND REASONABLE ASSURANCE REPORT ON COMPLIANCE To: The Board of Directors Ninh Thuan Agriculture and Rural Development Project Authority We (A&C Auditing and Consulting Co., Ltd. and Great South Auditing and Information Technology Solution Co., Ltd.) have examined the compliance level of Ninh Thuan Agriculture and Rural Development Project Authority (hereinafter referred to as "the Project Authority") with applicable Laws, regulations and bidding procedures, as well as other regulations of the Financing Agreement No. 6074- VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) (hereinafter referred to as the "Financing Agreement") for the fiscal year ended 31 December 2020. The Project Authority is responsible for the compliance with the Financing Agreement, the Project Operation Manual (POM) as well as the Laws and other regulations applicable to the Project (hereinafter collectively referred to as "the Project's regulations"). Responsibility of Auditors Our responsibility is to express an opinion, based on our examination, on the compliance of the Project Authority with the Project's regulations that could have a direct and material financial effect on the Financial Statements of the Project for the fiscal year ended 31 December 2020. We conducted our examination in accordance with the principles of International Standard on Assurance Engagements 3000 - Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000) insofar this standard could be usefully applied in this examination and in its specific compliance context. This standard requires that we comply with ethical requirements and that we plan and perform this examination to obtain the reasonable assurance about whether the Project Authority complies with the Project's regulations, that could have a direct and material financial effect on the Financial Statements. Our examination includes obtaining a sufficient understanding of the Project and the Project's regulations; assessing the risk on non-compliance exists that could have a direct and material financial effect on the Financial Statements of the Project; testing and evaluating, on a sample basis, the compliance of the Project Authority with the Project's regulations based on the assessed risk; and performing such other procedures as we considered necessary in the circumstances. We considered the following criteria in evaluating the compliance of the Project Authority with the Project's regulations: the Project Authority's awareness of the Project's regulations; the implementation of the Project's regulations by the Project Authority; the influence on the Financial Statements where the Project Authority fails to comply with one requirement or several requirements in the Project's regulations, if any; and that a weakness or a deficiency existed where Project Authority fails to comply with one requirement or several requirements in the Project's regulations that could have a direct and material financial effect on the Financial Statements. We believe that our examination provides a reasonable basis for our opinion. 18 Opinion In our opinion, the Project Authority complies, in all material respects, with the Project's regulations that could have a direct and material financial effect on the Financial Statements of the Project for the fiscal year ended 31 December 2020 based on the evaluation criteria above. This examination involved an evaluation of the historic compliance of the Project Authority with the Project's regulations at a specific point of time. Thus, this examination does not provide assurance for future periods due to the risk of changes in the Project's regulations, or that the degree of compliance with the Project's regulations, may deteriorate. ng and Consulting Co., Ltd. 7-j 'outh Auditing and Information oh' '.,Ltd. Ng hi Dung Deputy General Do Thi Mai Loan guyen Quang Toan N • yen Ha Nghia Director Auditor General Director Auditor Audit Practice Registration Audit Practice Registration Audit Practice Registration Audit Practice Registration Certificate No. 0100-2018- Certificate No. 0090-2018- Certificate No. 1057-2018- Certificate No 2645-2018- 008-1 008-1 169-1 169-1 Ho Chi Minh City, 14 July 2021 19 A&C AUDITING AND CONSULTING CO., LTD. bakertilly Merl RSA TEM VA EtS PFUSP cess sale mitts ns FDA] NAM 341.61i0114 1:47 3172 ktIv@a-t.com.vn -6902411710 41.7.404n. can w, A&C GREAT EGLITRAuomm3 AND LT. SOLUTION CO., LTD. 3n Mir it 44 4144, t 5151 ntIvAttistor 11766199193 292 1699er 16379 Top a the Alt 5 Ward 10, F49 Mium Dab-C.Hort Mnin 6.(5 Oa. warp°. 9i -6142192137414% klhxcen,.. vn GREAT SOUTH T91 914 51 38 416 795 Fan 194 131 35 476 149 24661 7461695•9444 cam No. 03KT-3/21/TC-AC-GS INDEPENDENT AND REASONABLE ASSURANCE REPORT ON THE INTERNAL CONTROL To: The Board of Directors Ninh Thuan Agriculture and Rural Development Project Authority We (A&C Auditing and Consulting Co., Ltd. and Great South Auditing and Information Technology Solution Co., Ltd.) have audited the design and operating effectiveness of the internal control of the Emergency Natural Disaster Reconstruction Project in some Central Provinces — Ninh Thuan Province (hereinafter referred to as "the Project") as operated by Ninh Thuan Agriculture and Rural Development Project Authority (hereinafter referred to as "the Project Authority") which existed for the fiscal year ended 31 December 2020. The internal control was set up for the purpose of managing risks to achieve the Project's objectives, including the reasonable prevention and detection of errors, irregularities and fraud. The internal control is the responsibility of the Project Authority. Responsibility of Auditors Our responsibility is to express an opinion, based on our audit, on the effectiveness of the internal control that could have a direct and material financial effect on the Financial Statements of the Project for the fiscal year ended 31 December 2020. We conducted our audit in accordance with the principles of International Standard on Assurance Engagements 3000 - Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000) insofar this standard could be usefully applied in this audit and in its specific compliance context. This standard requires that we comply with ethical requirements and that we plan and perform the audit to obtain the reasonable assurance about whether the internal control for the Project is adequately designed for the purpose of the Project and was operating effectively during the period covered by the audit. Our audit included obtaining a sufficient understanding of the Project and the internal control for the .50 01 Project; assessing the risk that a material weakness exists that could have a direct and material financial Co. effect on the Financial Statements of the Project; testing and evaluating, on a sample basis, the design :HO and operating effectiveness of internal control based on the assessed risk, and performing such other TOM procedures as we considered necessary in the circumstances. A We considered the following criteria in evaluating the effectiveness of the internal control: the requirement for design and implementation of the internal control in the Project Operation Manual (POM); the appropriateness of the internal control for the Project's activities and objectives; the implementation of the internal control by the Project Authority to achieve its objective of prevention and detection of errors, irregularities and fraud that could have a direct and material financial effect on the Financial Statements of the Project; the influence on the Financial Statements where one control or several controls did not operate as designed, if any; and that a weakness or a deficiency existed where a control or several controls did not reasonably prevent or detect risks that could have an adverse impact on the objectives of those internal controls which are to provide reasonable assurance that the Financial Statements are prepared, in all material respects, in accordance with the adopted accounting policies and POM, that the funds are utilized for the purposes defined in the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) and that the Project complies with the Financing Agreement, POM and other applicable laws and regulations. 20 We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the Project's internal control that existed during the fiscal year ended 31 December 2020, in all material respects, was adequately designed for the purpose of the Project and operated in an effective manner, based on the evaluating criteria above. 470 This audit involved a historic evaluation of the internal control at a specific point of time. Thus, this audit does not provide assurance for future periods due to the risk that internal control may become 31 inappropriate because of changes in conditions, or that the degree of compliance with policies or M Hif procedures may deteriorate. Gik mot. iting and Consulting Co., Ltd. outh Auditing and Information NM ology Solution td. 6rE 7- Ngu Dung puty General Do Thi Mai Loan guyen Quang Toan N uyen Ha Nghia Director Auditor General Director Auditor Audit Practice Registration Audit Practice Registration Audit Practice Registration Audit Practice Registration Certificate Na 0100-2018- Certificate No. 0090-2018- Certificate No. 1057-2018- Certificate No. 2645-2018- 008-1 008-1 169-1 169-1 Ho Chi Minh City, 14 July 2021 21 EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES - NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) MANAGEMENT LETTER For the fiscal year ended 31 December 2020 22 A&C AUDITING AND CONSULTING CO., LTD. bakertilly Mho Tr Aim 'TM vA eth niAp cent Nat man TN eAl NAM Tol. 14 lhal keTart kifraa, °Jon Nee 016 Palt/I MbeeeScra Toth Da INCelert CN Man Geemee.St 0.7901.o She CN1Nimin A&C GREAT GGuTRAuomm3 AND I X. SOLUTION CM., LTD. sty, mirth. nesn zee-. 9 kilter:on swain Irve:h Neve 1414.1tPL36.145191 etneeellhe Nee Tleadnuartexs 282 Nneese Imng 'Then St The elle Nn5. Wel ID .NI, Dent. He IN Man Z.th &Anti !feel; R.othimreatailtnDi.e..-Nctogoon Tie 4003076 *35 kitneQ..nun.ve GREAT SOWN NI let 11 31 4 799 Fee JEW 01 nEl 471149 "10 okehgeneedi No. 03KT/21/TQL-AC-GS Ho Chi Minh City, 14 July 2021 To: The Board of Directors Ninh Thuan Agriculture and Rural Development Project Authority Management Letter — Auditing the Financial Statements of the Emergency Natural Disaster Reconstruction Project in Some Central Provinces — Ninh Thuan Province for the fiscal year ended 31 December 2020 We (A&C Auditing and Consulting Co., Ltd. and Great South Auditing and Information Technology Solution Co., Ltd.) have audited the Financial Statements for the fiscal year ended 31 December 2020 of the Emergency Natural Disaster Reconstruction Project in Some Central Provinces — Ninh Thuan Province (hereinafter referred to as "the Project") under the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA), in accordance with the International Standards on Auditing and have issued the Auditor's Report No. 03KT-3/21/TC-AC-GS dated 14 July 2021. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Project's preparation and presentation of the Financial Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. Accordingly, we do not provide opinions on the effectiveness of the Project's internal control. The maintenance of adequate control designed to fulfill control objectives is the responsibility of Project Authority. Because of inherent limitations in internal control, errors or fraud may nevertheless occur and not be detected. Also, controls found to be functioning at a point in time may later be found deficient because of the performance of those responsible for applying them, and there can be no assurance that controls currently in existence will prove to be adequate in the future as changes take place in the Project. During our audit, we noted certain matters involving internal control and other operational matters that are presented for your consideration. These comments and recommendations, all of which have been discussed with the Project's Board of Directors, are intended to improve internal control or result in other operating efficiencies and are summarized in the enclosed Management Letter. Our audit procedures are designed primarily to enable us to form an opinion on the Financial Statements, and therefore may not bring to light all weaknesses in policies and procedures that may exist. We aim, however, to use our knowledge of the Project gained during our work to make comments and suggestions that we hope will be useful to you. This Management Letter is solely intended to provide information to the Donor, Project Authority and others in the Project and is not intended to provide to or be used by others except for the stated parties. 23 MINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH TI-JUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) MANAGEMENT LETTER For the fiscal year ended 31 December 2020 On this occasion, we would like to express our sincere thanks to all staff of the Project Authority for your kind support and help during the audit. Best regards, and Consulting Co., Ltd. h Auditing and Information neon Co., Lt Nguyenl ung uang Toan Be ty General Director General Director 24 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) MANAGEMENT LETTER For the fiscal year ended 31 December 2020 CONTENTS 32064 CoNG 11 NHIN. Page TOAN VA 3 NH( T )AI N 1. Implementation of recommendations in the previous year's Management Letter 26 rp Ht 1.1 Collection of documents on project costs 26 1.2 Exchange difference 26 2. Recommendations in the current year 27 2.1 Implementation progress of compensation, support and resettlement 27 2.2 Classification of project costs 27 2.3 Recognition of project costs in the right fiscal year 27 25 NINE THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES - NINH MOAN PROVINCE Pursuant to the Financing Agreement No. 6074- P71 dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) MANAGEMENT LETTER For the fiscal year ended 31 December 2020 1. Implementation of recommendations in the previous year's Management Letter 1.1 Collection of documents on project costs Issue In the previous year, the VAT invoices for the costs on consultation, assessment, evaluation, preparation of feasibility report, consultation on setting up social safety policy framework, expenses for bomb and mine clearance, etc. have not been fully collected. The main reason was that the Contractors delayed sending invoices to the Management Board office. Recommendation VAT invoice is one of the important evidences on project cots. The Project Authority should collect VAT invoices fully and promptly as required by laws. Implementation in the current year The Project Authority fully obtained VAT invoices. 1.2 Exchange difference Issue In the previous year, the Project Authority paid an advance for project package from IDA capital but not yet calculated and recorded exchange differences for the amount of VND 5.895.035. Recommendation The Project Authority should calculate and record exchange differences when making payment to the contractors. Implementation in the current year The Project Authority calculated the exchange differences when making payment to the contractors, but the current year's figures are inaccurately calculated. The auditor checked and suggested adjusting the amount of VND 16.623.124. The Project Authority has paid attention to and will accurately calculate the exchange differences in the following year. 26 NINH THUAN AGRICULTURE AND RURAL DEVELOPMENT PROJECT AUTHORITY EMERGENCY NATURAL DISASTER RECONSTRUCTION PROJECT IN SOME CENTRAL PROVINCES — NINH THUAN PROVINCE Pursuant to the Financing Agreement No. 6074-VN dated 29 September 2017 between the Socialist Republic of Vietnam and the International Development Association (IDA) MANAGEMENT LETTER For the fiscal year ended 31 December 2020 2. Recommendations in the current year 2.1 Implementation progress of compensation, support and resettlement Issue As of 31 December 2020, the implementation progress of compensation, support and resettlement is still delayed. Only package Cl-NT-WI (embankment of Dinh River, Phuoc Son Commune, Ninh Phuoc District) has been basically completed while the packages such as package CI-NT-W2 (embankment of Lu River, Ninh Phuoc District and embankment of Ba Rau residential area, Thuan Bac District), package C1-NT-W3 (embankment of Ong River, Tan Son Town, Ninh Son District), package Cl-NT-W4 (upgrading Highway IA to Phuoc Ha and Tu Thien - Vinh Truong Street, Thuan Nam District), package Cl-NT-W5 (upgrading Ta Noi - Ma Noi Street) have not completed the compensation, support and resettlement. The main reason was that the compensation price has not been approved by Department of Natural Resources and Environment and People's Committee of Ninh Thuan Province. Recommendation The Project Authority should urgently report to the People's Committee of Ninh Thuan Province and ask for directions from relevant departments, agencies and local authority to speed up the progress. At the same time, the Project Authority should coordinate with the government of districts and the Land Fund Development Agency in fmalizing the compensation plan, supervising and speeding up the payment for compensation and site clearance. Opinion of the Board of Directors The Project Authority consulted directions from provincial People's Committee and coordinated with the relevant agencies to speed up the implementation progress. The compensation, support and resettlement of all packages can basically be completed in 2021. 2.2 Classification of project costs Issue During the year, the Project Authority incorrectly classified the fees on auditing the Financial Statements and the cost of independent consultancy and supervision on social and environmental safety policies in expenses for construction consultancy and supervision instead of other expenses for an amount of VND 492.581.600. Recommendation The Project Authority should appropriately classify the expenses. Opinion of the Board of Directors Agree with the auditor's recommendation and will comply with in the following years. 2.3 Recognition of project costs in the right fiscal year Issue Details of some project costs of which the acceptance minutes and invoices were issued in 2020 but recorded in 2021 are as follows: costs of project supervision consultancy and assessment (M&E) (package C3-NT- CS2) for an amount of VND 188.148.950 and construction cost (package CI-NT-WI) for an amount of VND 1.283.132.685. Recommendation The Project Authority should recognize project costs in the proper year. Opinion of the Board of Directors Agree with the auditor's recommendation and will comply with in the following years. 27 "The original is a PDF file with no Text. We were not able to OCR and extract the Text. Error:PDF01"